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SANTA ANA EMPOWERMENT CORPORATION Notes to the Financial Statements (Continued) June 30, 2010 and 2009 On June 14, 2005, the Organization entered into an agreement with Kidworks, whereby the Organization awarded Kidworks a conditional grant of $314,282. The funds were used to fund the renovation costs for a community center site located in the Zone 1 area of the Santa Ana Empowerment Zone. As long as Kidworks complies with the terms of the agreement and uses the property for the Empowerment Zone program, an amount equal to $62,856 will be forgiven annually. In the event the property is put to any other use than for the designated Empowerment Zone program before July 31, 2010, the remaining balance would be payable in full to the Organization who would then return the funds to HUD. The outstanding balance was $68,094 and $130,951 at June 30, 2010 and 2009, respectively. On August 20, 2009, the Organization entered into an agreement with The Cambodian Family, a subrecipient, whereby the Organization loaned the Cambodian Family $1,730,939 for the purchase of property that will be used for its headquarters where it will undertake programs for education, job placement and health. The interest free loan is payable on August 20, 2014. The Cambodian Family is not obligated to make payments to the Organization as long as the property is used for the Empowerment Zone program. In the event that the property is put to any other use than the designated Empowerment Zone program, the balance would be payable in full to the Organization who would then return the funds to HUD. The outstanding balance is $1,730,939 as June 30, 2010. (7) ACCRUED PROGRAM REIMBURSEMENTS TO SUBRECIPIENTS Accrued program reimbursements to subrecipients, including retentions payable, consisted of the following at June 30: 2010 2009 The Cambodian Family $ 40,081 $ 13,262 Mexican American Oppurtunity Foundation - 10,630 Templo Calvario CDC 1,633 17,546 Total $ 41,714 $ 41,438 (8) GOING CONCERN The Department of Housing and Urban Development (HUD) has determined that the grant period for all Empowerment Zone grants will end on July 2, 2010. HUD has granted the Organization an extension until August 30, 2010 to incur expenses. The total unexpended grant funds of $30,509 at June 30, 2010 must be expended by that date. The Organization will have until September 15, 2010 to request reimbursement for eligible Empowerment Zone expenses. At the conclusion of the grant period the Santa Ana Empowerment Corporation will discontinue operations. All assets will be reverted to the City of Santa Ana. The salaries and benefits of the staff under the Santa Ana Empowerment Corporation will be transferred to other projects within the Santa Ana Redevelopment Agency. 19C-22